Adenia Partners Ltd., a Mauritius-based private equity firm, has closed its fifth Africa-focused fund at a staggering $470 million, making it the largest fund of its kind raised since 2021. This achievement surpasses their initial target of $460 million.
The fund, known as Adenia Capital V, attracted a diverse group of investors, including:
- Development Finance Institutions: Norfund AS (Norway), US International Development Finance Corp. (US), Findev Inc. (Canada)
- Institutional Investors: Public Investment Corp. Ltd. (South Africa), Ghanaian and Kenyan pension funds
- Returning Investors: European Investment Bank, World Bank’s International Finance Corporation
This significant raise reflects Adenia’s strong track record. The firm boasts successful exits from previous funds and consistent financial returns, making them an attractive partner for investors seeking growth in Africa.
Adenia Capital V will target established businesses in sectors like fintech, telecommunications, and healthcare. The fund will focus on acquiring controlling stakes (typically 51% to 100%) to drive strategic growth plans and maximise returns. Alexis Caude, Adenia’s Managing Director, highlighted the challenges of exits in Africa and how control allows for easier exits by attracting strategic investors.
This fundraising marks Adenia’s growing commitment to Africa. They recently opened a new office in Lagos, Nigeria, showing their focus on the continent’s largest economy. Additionally, Adenia Capital V can now invest larger amounts, with an average deal size of $40 million. This allows them to pursue bigger deals with potentially greater impact.
Its recent deal with Air Liquide SA exemplifies Adenia’s strategic approach. This deal involved acquiring 12 of Air Liquide’s African operations. By supporting the growth of this new industrial gases group and building long-term partnerships, Adenia aims to create value and contribute to Africa’s sustainable development.
Significance for Africa’s Growth
Adenia’s success story underscores the increasing role of international development finance institutions (DFIs) in supporting Africa’s private equity landscape. This is particularly crucial during tougher economic environments, as seen in the recent decline of overall private capital fundraising in Africa.
According to the African Private Equity and Venture Capital Association (AVCA), the total value in the first nine months of 2023 fell to $1.2 billion, a 40% decline compared to the year before. DFIs provide crucial patient capital that can help bridge the gap during these periods.
Adenia Capital V’s focus on key sectors like fintech, telecom, and healthcare aligns with Africa’s development priorities. Fintech, for example, is a booming sector with the potential to revolutionize financial inclusion across the continent. A 2023 GSMA report indicated that 47% of sub-Saharan African adults remain unbanked. Investments in innovative fintech solutions can bridge this gap and empower millions. Similarly, investments in telecom infrastructure can enhance connectivity and unlock further economic opportunities.
A Catalyst for Broader Transformation?
While Adenia’s success is commendable, questions remain about the broader impact on Africa’s development. Critics argue that private equity firms, with their focus on high returns, might prioritize short-term gains over long-term societal benefits. To counter this, impact investing strategies that consider not just financial returns but also social and environmental factors are gaining traction.
However, Adenia’s emphasis on established businesses with strong growth potential suggests a focus on creating sustainable value. Additionally, the involvement of DFIs often comes with social and environmental considerations alongside financial goals.
Ultimately, the true impact of Adenia Capital V will depend on the specific companies they invest in and the strategies they implement. The success of this fund has the potential to be a catalyst for broader transformation in Africa, driving not just economic growth but also positive social and environmental change. Careful monitoring and evaluation of the fund’s activities will be crucial in determining its ultimate contribution to Africa’s development journey.
